Gold Technical: Bears are stalling again at the 200-day moving average ahead of US CPI and ECB

  • Last Friday’s price actions of spot Gold (XAU/USD) have managed to find support again at the 200-day moving average ahead of the US CPI data release & ECB monetary policy decision this week.
  • The recent -5.15 % decline seen in Gold from its 20 July 2023 swing high of US$$1,987.53 has started to see some signs of short-term bullish reversal elements since 21 August 2023.
  • The up-trending 10-year US Treasury real yield has also started to consolidate between 1.95% to 2.00% level which may negate the bearish tone on Gold at least in the short-term.
  • US$1,910 support and US$1,932 resistance are the two key short-term technical levels to watch.

Since its 20 July 2023 swing high of US$1,987.53, spot Gold (XAU/USD) has declined by -5.15% to print a low of US$1,885 on 17 August 2023 in line with a rising longer-term 10-year US Treasury real yield which increased the opportunity costs of holding gold as it is a non-interest yielding asset.

Major uptrend remains intact

Fig 1: Gold (XAU/USD) major trend as of 11 Sep 2023 (Source: TradingView, click to enlarge chart)

Despite the underperformance of Gold seen in the past five weeks, its major uptrend phase in place since the 3 November 2022 low of US$1,616 remains intact as the -5.15% fall from the 20 July 2023 high of US$1,987.15 has managed to stall at the lower boundary of a major ascending channel from its 3 November 2022 major swing low and close to the 38.2% Fibonacci retracement of the prior major uptrend phase from 3 November 2022 low to 4 May 2023 high (see daily chair).

Also, the up-trending 10-year US Treasury real yield (derived via the inflation-protected securities, TIPS of the same duration) has started to consolidate at the 1.95% to 2.00% level which may negate the bearish tone on Gold at this juncture.

Short-term momentum has tilted toward the bullish camp

Fig 2: Gold (XAU/USD) minor short-term uptrend as of 11 Sep 2023 (Source: TradingView, click to enlarge chart)

Since 26 August 2023, the price actions of Gold (XAU/USD) have reintegrated back above the key 200-day moving average and its recent slide from its US$1,953 minor swing high of 1 September 2023 has managed to find support at the 200-day moving after a retest on it on last week, the lower boundary of a minor ascending channel from 21 August 2023 low and close to the 50% Fibonacci retracement of the recent minor uptrend from 21 August 2023 low to 1 September 2023 high.

In addition, the hourly RSI oscillator, a gauge of short-term momentum shaped a bullish divergence condition on 7 September 2023 and continued to trace out a series of “higher lows” thereafter.

These observations indicate a revival of short-term bullish momentum conditions that in turn advocates another round of minor potential up leg in Gold. Watch the US$1,910 key short-term pivotal support and a break above the intermediate resistance at US$1,932 (also the 50-day moving average) may see a further push-up for the next resistances to come in at US$1,938 and US$1,949.

On the other hand, failure to hold at US$1,910 invalidates the bullish scenario for a further slide to expose the major support at US$1,903.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, Asia Pacific at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.